Markets are quiet, the volatility gone, waiting for something to happen. It’s not calm, and plenty tense. There is a lot happening but not concluding.

The overriding near-term influence: The "Battle of 1370." What, Europe again? The English and French refighting some unpleasantness between Crecy and Agincourt?

Nah. Every stock trader on the planet is mesmerized by the "battle" in the Standard & Poor’s 500 index: Will the index top 1,370? Go above it, and stocks should rocket, if only because so many buy the chart.

One problem: The S&P 500 since mid-December has already run straight from 1,200, and been stuck between 1,345 and 1,365 for three weeks. It’s as vulnerable on the downside as it is likely to explode upward.

Fed-managed long-term rates no longer react to anything: the 10-year Treasury note since the end of October has traded 90 percent of the time between 1.9 percent and 2.05 percent.

Europe has pulled back from another Greek brink, but not resolved a thing. Austerity in the big dominoes — Italy, Spain and France — has not begun, with each promising fiscal tightening of about 4 percent of gross domestic product this year. In U.S. equivalent, imagine a $600 billion tax-hike/spending-cut combination during the onset of new recession.

The European Central Bank will next week expand bank rescue funding toward infinity. However, the ECB "fire hose" approach will have little economic effect; it will just prevent weak banks from failing, while strong banks remain disinterested in risk-taking, no matter how much cash the ECB sprays.

So, with the world admiring its navel, what’s up with the long, slow roller: housing?

Finance types have amused themselves in the new year by announcing housing recovery. Merrill Lynch’s newest report concludes: "The housing recovery would support an even bigger commitment to equities in our portfolios."

Right. Merrill would find sunrise or Joe Stalin’s birthday good reasons to buy more stock.

Home sales data had been talked this winter into optimistic anticipation, and the flat reality was misreported: A ballyhooed but minor gain in January sales of existing homes was reversed by a downward revision for December.

Sales of new homes were just the reverse: off 0.9 percent in January, revised up a little in December. And this winter was one of the mildest in a long time. New applications for purchase loans have been unchanged all through the winter into February.

Home prices have flattened. The Federal Housing Finance Agency Home Price Index wobbled weakly through 2011 and recovered in December to a decline of 0.8 percent, from where it started.

The latest S&P/Case-Shiller price data is a hair weaker, through last November off 3.7 percent year to date, and the last two months showing new declines in 19 of 20 cities. Stock hawkers see these trends as a happy turn to price stability. If I have been dragged to the bottom of a swimming pool, holding my breath, is my situation stable?

There are genuinely positive trends, and one big puzzle.

The true positives include some big drops in overall mortgage delinquency: in the last year, at 18.9 percent in Nevada, 14.3 percent in Michigan, 21 percent in California, and 24.5 percent in Arizona. Total mortgages delinquent or in foreclosure have dropped by almost 900,000 in the last year.

But don’t get carried away just yet. Nationally, 12.3 percent of loans are still delinquent: 3.86 million loans are 90-plus days late or in foreclosure, down only 8 percent from last year, according to Lender Processing Services.

The puzzle: a nationwide drop in listed inventory for sale, down 21.5 percent last year, with 11.5 percent of that drop coming in December alone. And this data coming from the ever-optimistic National Association of Realtors trade group.

However, the decline is real and large, and normally a precursor to rising prices. This time, we can’t tell how much is instead due to exhausted sellers, others fearful of discounts too deep, or with too little equity to hire a broker and have a down payment for the next home.

We’ll hope and see.

On the public policy front, the federal government is immobile and annoyed by Federal Reserve pleas for housing help, though some states are moving. Florida has legislation pending that would make foreclosure easier.

In the seventh year of fiddling and loan-mitigation pretense, there is no better sign than local governments wanting to get on with it. That’s a true marker of moving into the back half of this mess.

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